WEBVTT - Breaking Up AOL is Hard To Do 0:00:04.120 --> 0:00:07.160 Get in touch with technology with tech Stuff from how 0:00:07.200 --> 0:00:13.800 Stuff Works dot com. Hey there, and welcome to tech Stuff. 0:00:13.840 --> 0:00:16.759 I'm your host, Jonathan Strickland. I'm an executive producer with 0:00:16.800 --> 0:00:18.920 How Stuff Works, and I heart radio and I love 0:00:19.079 --> 0:00:23.360 all things tech. And in our last episode, I traced 0:00:23.400 --> 0:00:26.200 how A o L became a dominant player in the 0:00:26.239 --> 0:00:30.320 dial up online service provider business, leading to the incredibly 0:00:30.400 --> 0:00:34.199 ambitious merger with Time Warner to form a o L. 0:00:34.320 --> 0:00:37.040 Time Warner and I talked about how the dot com 0:00:37.120 --> 0:00:40.519 crash and the rise of broadband dealt a double whammy 0:00:40.560 --> 0:00:43.400 of a blow to the brand new company, making the 0:00:43.440 --> 0:00:48.200 merger look like it was premature and wildly too expensive 0:00:48.320 --> 0:00:51.760 of a move for both companies, and I ended mentioning 0:00:51.800 --> 0:00:55.240 that Steve Case, the last remaining founder of A o L, 0:00:55.440 --> 0:00:58.640 stepped down from the board of directors in two thousand five. 0:00:59.120 --> 0:01:02.360 But not every ing was dark and dismal for A 0:01:02.480 --> 0:01:05.600 o L. In two thousand five, the company was being 0:01:05.720 --> 0:01:08.760 eyed with interest by some other big names in the 0:01:08.800 --> 0:01:12.520 text sphere. There were stories that both Microsoft and Google 0:01:12.680 --> 0:01:15.320 were looking at A o L as a possible acquisition 0:01:15.360 --> 0:01:18.639 if they could convince the merged company to break up. Again, 0:01:19.360 --> 0:01:21.560 A O L had repositioned itself with a bit of 0:01:21.600 --> 0:01:24.640 a renaissance. At the end of two thousand four, many 0:01:24.760 --> 0:01:28.760 people were still using lots of A O L's services, 0:01:28.800 --> 0:01:32.920 including A O L Instant Messenger and map Quest, which 0:01:33.160 --> 0:01:36.720 the company owned. The A O L dot Com website 0:01:36.760 --> 0:01:39.960 offered up the content that previously only A O L 0:01:40.040 --> 0:01:43.640 subscribers had been able to access, and it was all free. Well, 0:01:43.680 --> 0:01:45.960 I mean, it was his ads supported, but you get 0:01:45.959 --> 0:01:48.800 what I mean. However, al L was still making some 0:01:48.880 --> 0:01:53.880 really big business moves while things were looking uncertain, and 0:01:53.960 --> 0:01:56.880 that just made people kind of wonder what was going on. 0:01:57.000 --> 0:02:00.120 In two thousand four, the company had agreed to acquire 0:02:00.000 --> 0:02:04.520 a startup called Advertising dot Com, Inc. And I'm pretty 0:02:04.520 --> 0:02:07.320 sure you can guess what business that company was in 0:02:08.040 --> 0:02:10.840 the division We get a rebranding in two thousand thirteen 0:02:10.919 --> 0:02:13.880 as A O L Networks, partly to send the message 0:02:13.919 --> 0:02:17.680 that services could span across different types of screens, not 0:02:17.840 --> 0:02:22.320 just computers, but televisions and phones and other devices. But 0:02:22.440 --> 0:02:26.320 executives over at the time Warner side of this company 0:02:26.480 --> 0:02:29.840 weren't really head over heels in love with A O L. 0:02:30.320 --> 0:02:33.600 Before the merger, A O l's value was estimated to 0:02:33.600 --> 0:02:38.080 be somewhere in the two billion dollar range. Yikes. After 0:02:38.160 --> 0:02:43.040 the dot com crash, however, that value dropped to five 0:02:43.400 --> 0:02:47.840 billion according to some accounts, although honestly most accounts say 0:02:48.040 --> 0:02:51.000 the value was closer to twenty billion. But whether it's 0:02:51.040 --> 0:02:54.320 five or twenty, both of which are enormous numbers, get 0:02:54.480 --> 0:02:58.200 don't get me wrong. Billion is a lot. That's such 0:02:58.200 --> 0:03:02.720 a huge drop from two hundred billion. By two thousand five, 0:03:03.560 --> 0:03:06.680 the number, according to some sources, had climbed a little bit. 0:03:06.720 --> 0:03:09.680 It was moving in the right direction, but still a 0:03:09.800 --> 0:03:13.240 fraction of what A O L had been prior to 0:03:13.400 --> 0:03:17.160 the merger. At the time of the merger, AOL had 0:03:17.200 --> 0:03:21.600 the higher market capitalization between the two companies, but Time 0:03:21.639 --> 0:03:24.919 Warner was making way more revenue. So you can look 0:03:24.919 --> 0:03:28.280 at this as indicative of the whole dot com problem. 0:03:28.320 --> 0:03:31.440 In the first place, you had these internet based companies 0:03:31.840 --> 0:03:36.120 that were valued much, much greater than what they could 0:03:36.160 --> 0:03:39.480 actually pay off in the They their value was greater 0:03:39.520 --> 0:03:42.920 than their worth, and that was really the issue that 0:03:43.000 --> 0:03:46.640 led to the dot com bubble bursting in the first place. 0:03:47.200 --> 0:03:51.400 The culture clash never settled down between the two companies. 0:03:51.880 --> 0:03:55.160 They weren't able to find a good equilibrium. The AOL 0:03:55.240 --> 0:03:59.040 executives felt their traditional media counterparts just didn't get how 0:03:59.120 --> 0:04:02.080 business on the inner that worked. They were probably right, 0:04:02.840 --> 0:04:05.200 but the Time Warner executives saw A O L as 0:04:05.240 --> 0:04:09.160 wasteful and filled to the brim with hubris. A company 0:04:09.240 --> 0:04:11.840 just was convinced that the way it did things was 0:04:11.960 --> 0:04:14.920 the right way, and that it was building a business 0:04:14.920 --> 0:04:17.279 on a product that was clearly on the way out, 0:04:17.360 --> 0:04:21.560 that being dial up service, and the Time Warner executives 0:04:21.839 --> 0:04:25.240 were kind of right. No one was wholly in the 0:04:25.279 --> 0:04:28.640 wrong here, other than the fact that this partnership was 0:04:28.839 --> 0:04:32.200 wholly in the wrong. In fact, by two thousand three, 0:04:32.520 --> 0:04:35.880 just a few years after this merger, A O L. 0:04:36.000 --> 0:04:39.640 Time Warner began to drop the A O L part 0:04:39.720 --> 0:04:43.520 from its name came to just call itself Time Warner again. 0:04:44.120 --> 0:04:46.640 Keep in mind, all L was the company that technically 0:04:47.200 --> 0:04:51.200 made the acquisition. It's technically the company that bought Time Warner, 0:04:51.600 --> 0:04:57.160 but now the collective entity was casually ignoring the online 0:04:57.200 --> 0:05:00.360 part of its identity. In two thousand five, A O 0:05:00.560 --> 0:05:04.640 L and tell A Pictures Productions, a division from Warner Brothers, 0:05:04.920 --> 0:05:08.480 would create TMZ and If you're not aware of what 0:05:08.600 --> 0:05:14.919 that is, consider yourself fortunate. It's a tabloid news website 0:05:15.040 --> 0:05:19.279 that's mainly focused on following celebrities around and publishing everything 0:05:19.279 --> 0:05:22.240 it can about those celebrities. It has been one of 0:05:22.279 --> 0:05:24.480 the more successful properties to come out of the A 0:05:24.600 --> 0:05:28.400 O L and Time Warner days. So I'm pretty snarky 0:05:28.440 --> 0:05:31.720 about the whole thing. I don't really like TMZ and 0:05:31.800 --> 0:05:35.440 the way they do business. However, I cannot deny that 0:05:35.520 --> 0:05:38.640 it's been a money maker. It has been very successful, 0:05:39.200 --> 0:05:42.680 whether I like it or not. So I mean, you know, 0:05:44.160 --> 0:05:46.719 they they're the ones who became really rich on it, 0:05:46.920 --> 0:05:49.799 So what do I know. In two thousand and six, 0:05:50.080 --> 0:05:53.360 America Online officially changed its name to A O L. 0:05:53.920 --> 0:05:57.480 CEO John Miller said that the reason for this change 0:05:57.960 --> 0:06:01.680 was that getting America Online would That had been the 0:06:01.680 --> 0:06:04.600 old mission of the company, to get America online, so 0:06:04.640 --> 0:06:08.239 that's why it called itself America Online. But he said, 0:06:08.440 --> 0:06:11.640 the company did that. We've done that already. We achieved 0:06:11.640 --> 0:06:15.839 our goal. So this new name indicates the quote expanded 0:06:15.880 --> 0:06:21.160 mission to make everyone's online experience better end quote. A 0:06:21.279 --> 0:06:24.520 O L had also changed in another way. It changed 0:06:24.560 --> 0:06:28.640 from A corporation into a limited liability company. Now they 0:06:28.640 --> 0:06:31.920 get into the differences between an LLC and a corporation 0:06:31.960 --> 0:06:35.040 in the United States is more than a little beyond 0:06:35.120 --> 0:06:37.760 the scope of tech stuff, but it mostly has to 0:06:37.800 --> 0:06:40.400 do with how profits and losses are handled, and it 0:06:40.480 --> 0:06:42.560 also has to do a lot with how a company 0:06:42.680 --> 0:06:46.000 is taxed. So we're not gonna dive into all that. 0:06:46.279 --> 0:06:50.080 I'm sure most of you don't really care, and honestly, 0:06:50.080 --> 0:06:53.280 it gets pretty dull pretty fast. But the following year, 0:06:53.880 --> 0:06:58.240 AOL made another big change. It moved its headquarters, which 0:06:58.279 --> 0:07:01.480 had been in Dulles, Virginia ever since the founding of 0:07:01.520 --> 0:07:03.920 the company. Now it was going to move to New 0:07:04.000 --> 0:07:08.200 York City. It also laid off about two thousand employees, 0:07:08.360 --> 0:07:13.160 or about of its entire workforce. This move was largely 0:07:13.320 --> 0:07:17.120 to refocus a o L on its advertising business as 0:07:17.160 --> 0:07:19.960 the dial up side continued to dwindle, though it was 0:07:20.000 --> 0:07:24.040 still generating revenue at that point. This was two thousand seven, 0:07:24.080 --> 0:07:26.440 and and just for reference, two thousand seven was also 0:07:26.520 --> 0:07:29.880 when Apple introduced the iPhone. So the iPhone comes out, 0:07:29.960 --> 0:07:33.040 people are still using dial up modems enough for a 0:07:33.160 --> 0:07:36.080 o L's division to be profitable that's not the last 0:07:36.080 --> 0:07:38.560 time we'll talk about dial up though. Anyway. A o 0:07:38.720 --> 0:07:42.560 l's new headquarters were closer to Time Warner's HQ, and 0:07:42.600 --> 0:07:45.640 it was also much closer to the advertising world in general. 0:07:45.680 --> 0:07:49.680 The advertising world in the United States is almost entirely 0:07:49.760 --> 0:07:52.760 based out of New York City, so this was putting 0:07:53.320 --> 0:07:58.080 a o L close to where the advertising businesses thrived. 0:07:58.640 --> 0:08:02.160 AOL also would change CEO s Jonathan Miller, who had 0:08:02.200 --> 0:08:04.880 been leading the company up to that point, was replaced 0:08:04.880 --> 0:08:08.000 by a guy named Randy Falco. A o L made 0:08:08.000 --> 0:08:12.480 some acquisitions, many of which did not turn out so well. So. 0:08:12.560 --> 0:08:15.840 For example, in two thousand eight, a o L acquired 0:08:15.880 --> 0:08:19.440 a social networking site called Bibo. It's not that well 0:08:19.480 --> 0:08:21.840 known in the United States, but it was the second 0:08:21.920 --> 0:08:25.640 largest social network in the UK after Facebook. Back in 0:08:25.680 --> 0:08:29.360 two thousand and eight. Bibo could boast twenty two million 0:08:29.480 --> 0:08:33.720 unique visitors and they spent an average time of forty 0:08:33.800 --> 0:08:37.200 minutes a day on the service, which sounds like a 0:08:37.240 --> 0:08:41.640 pretty attractive bargain. You can go to an advertiser and say, 0:08:42.040 --> 0:08:44.600 I can guarantee you that millions of people are going 0:08:44.600 --> 0:08:46.800 to look at this for forty minutes every day, and 0:08:46.840 --> 0:08:48.600 you're gonna be able to sell a lot of ads. 0:08:49.280 --> 0:08:52.600 So A O L would spend eight hundred fifty million 0:08:52.840 --> 0:08:56.720 dollars in cash on this acquisition. So how did it 0:08:56.760 --> 0:09:01.880 turn out? Not great at all? Now, you could argue 0:09:01.920 --> 0:09:04.320 that Bibo was on the same path of decline that 0:09:04.440 --> 0:09:07.200 A O L was as a As broadband was becoming 0:09:07.200 --> 0:09:11.319 more popular, A Well's dial up was dwindling. Well, Bibo 0:09:11.520 --> 0:09:14.240 was seeing its number of users dwindle. A lot of 0:09:14.240 --> 0:09:17.359 them were going to other social networking sites like Facebook. 0:09:18.040 --> 0:09:21.000 A O L was not able to capitalize on Bibo 0:09:21.200 --> 0:09:25.199 like executives had hoped, So just two years after buying 0:09:25.240 --> 0:09:27.720 the company, A o L would sell it to a 0:09:27.760 --> 0:09:32.240 digital media investor group called Criterion Capital Partners, and the 0:09:32.280 --> 0:09:35.080 price was much lower than the eight hundred fifty million 0:09:35.080 --> 0:09:37.560 dollars that A o L had paid for it. They 0:09:37.640 --> 0:09:41.440 sold it for ten million. Three years after that, the 0:09:41.440 --> 0:09:44.640 original founders of Bibo were able to buy back their 0:09:44.679 --> 0:09:48.760 company from this investor group for just one million dollars. 0:09:48.800 --> 0:09:50.920 So they sold it for a D fifty million and 0:09:50.960 --> 0:09:54.280 then they bought it back for one million. Now that's 0:09:54.320 --> 0:09:56.199 all a bit outside the scope of A O L. 0:09:56.400 --> 0:09:58.920 But I thought it was an interesting little tidbit, so 0:09:58.960 --> 0:10:01.840 I decided to include. Plus it's another way to illustrate 0:10:02.200 --> 0:10:05.880 how A o L was still making some pretty questionable choices. 0:10:06.280 --> 0:10:09.600 That the merger with Time Warner wasn't an outlier. I 0:10:09.600 --> 0:10:11.680 mean it was an outlier in the sense of how 0:10:11.720 --> 0:10:14.600 big it was. A hundred sixty billion dollars is an 0:10:14.760 --> 0:10:19.120 enormous outlier, but not an outlier in the sense of 0:10:19.160 --> 0:10:23.880 making some rash decisions that ultimately didn't pay off. Now 0:10:23.920 --> 0:10:26.000 that's also not to say that every purchase A o 0:10:26.160 --> 0:10:29.760 L made was inherently bad. A o L bought lots 0:10:29.760 --> 0:10:34.720 of companies, dozens of them. In fact, companies like Weblogs Inc. 0:10:35.160 --> 0:10:38.840 That owns popular sites like Engadget and the former Joystick. 0:10:39.840 --> 0:10:43.839 There was Game Daily that A o L purchased True Vio. 0:10:44.000 --> 0:10:46.800 All of those made products or services that faced the public. 0:10:47.120 --> 0:10:51.040 A well also bought companies like e Voice, Info Interactive, 0:10:51.400 --> 0:10:55.280 and ad Tech. Those were more business oriented ventures, so 0:10:55.440 --> 0:10:58.640 not necessarily things that you and I would encounter, but 0:10:58.760 --> 0:11:02.120 other enterprises would. And A o L was never afraid 0:11:02.160 --> 0:11:05.360 of buying other companies in an effort to remain relevant 0:11:05.679 --> 0:11:08.600 or regain relevance, depending upon your point of view, but 0:11:08.720 --> 0:11:11.800 things between A O L and Time Warner would get 0:11:11.960 --> 0:11:15.280 less stable by the year. The cultures of the two 0:11:15.280 --> 0:11:19.080 companies still had not found a good meeting point. In 0:11:19.160 --> 0:11:23.960 March two thousand nine, the company replaced CEO Randy Falco. 0:11:24.120 --> 0:11:26.760 The new leader for the A O L branch would 0:11:26.760 --> 0:11:30.920 be Tim Armstrong. Armstrong was coming from Google, where he 0:11:30.960 --> 0:11:34.560 had helped build the company's advertising division into a juggernaut. 0:11:35.280 --> 0:11:39.400 At the time, various industry journals reported that Armstrong had 0:11:39.480 --> 0:11:43.520 had aspirations of being a CEO of a company, He 0:11:43.640 --> 0:11:46.320 just hadn't quite settled on which company he wanted to 0:11:46.360 --> 0:11:49.719 go for. According to add Age, his name was one 0:11:49.760 --> 0:11:52.319 of the ones that Yahoo was considering when it was 0:11:52.360 --> 0:11:56.360 searching for a replacement for their CEO and founder Jerry Yang. 0:11:57.120 --> 0:11:59.760 But A O L would end up being his destination. 0:12:00.320 --> 0:12:02.720 And that was just the beginning for the big events 0:12:02.800 --> 0:12:05.720 of two thousand nine. I'll explain more in just a second, 0:12:05.760 --> 0:12:08.920 but first let's take a quick break to thank our sponsor. 0:12:16.559 --> 0:12:19.760 In May two thousand nine, just two months after Tim 0:12:19.880 --> 0:12:22.920 Armstrong took the helm of A O L. The tumultuous 0:12:22.960 --> 0:12:25.480 pairing of A O L and Time Warner began the 0:12:25.640 --> 0:12:29.560 slow march to divorce. Time Warner said it would spin 0:12:29.640 --> 0:12:33.000 off A O L as an independent company later that year. 0:12:33.440 --> 0:12:35.959 In December of two thousand nine, A O L shares 0:12:35.960 --> 0:12:38.400 would begin trading on the floor of the New York 0:12:38.520 --> 0:12:42.480 Stock Exchange. Time Warner executives said the reason for the 0:12:42.559 --> 0:12:45.360 split was that A O L was more likely to 0:12:45.440 --> 0:12:49.199 grow as a separate company than as part of Time Warner, 0:12:49.440 --> 0:12:52.520 and that A O L attracted different investors than Time 0:12:52.559 --> 0:12:55.760 Warner did. Time Warner would become a more lean and 0:12:55.840 --> 0:12:59.480 straightforward company as well, according to the wisdom of the time, 0:13:00.120 --> 0:13:03.160 and this was largely true. Time Warner, by the way, 0:13:03.280 --> 0:13:05.800 and I'll again have to do a full episode about 0:13:05.880 --> 0:13:09.000 this whole thing at some point. They would later spend 0:13:09.000 --> 0:13:12.560 off Time Incorporated in two thousand fourteen, and in two 0:13:12.600 --> 0:13:16.119 thousand eighteen, A T and T would move to acquire 0:13:16.240 --> 0:13:21.000 Time Warner, which is now called Warner Media LLC. By 0:13:21.040 --> 0:13:24.680 the time this episode airs, that should be finalized. But 0:13:25.120 --> 0:13:29.280 as I'm recording this, there's currently an appeal out on 0:13:29.320 --> 0:13:32.680 an earlier court ruling that permitted the mergers. So you 0:13:32.720 --> 0:13:35.679 had one court say yeah, that mergers fine, and A T. 0:13:35.800 --> 0:13:38.440 And T and Time Warner were ready to make it 0:13:38.440 --> 0:13:41.200 a real deal, but then you had an appeal go out, 0:13:41.320 --> 0:13:43.720 and that appeal is still being decided as of the 0:13:43.720 --> 0:13:48.120 time I'm recording this episode. Between the announcement and the 0:13:48.200 --> 0:13:52.679 actual spinoff date, A O L would acquire another company 0:13:52.760 --> 0:13:58.439 called Patch Media, and Patch Media oversaw community news websites 0:13:58.559 --> 0:14:03.120 so reach local community news. It was also a company 0:14:03.160 --> 0:14:06.400 that was co founded by Tim Armstrong, the leader of 0:14:06.520 --> 0:14:09.600 A O L. A L would end up investing another 0:14:09.679 --> 0:14:14.680 fifty million dollars in Patch in but in the company 0:14:14.720 --> 0:14:17.360 announced it would be reducing the number of Patch sites 0:14:17.440 --> 0:14:20.360 from nine hundred to six hundred, and also the company 0:14:20.360 --> 0:14:23.480 would be laying off staff at all levels of the organization. 0:14:23.960 --> 0:14:29.760 Armstrong also famously publicly fired Patches creative director over a 0:14:29.840 --> 0:14:35.880 conference call on which all Patch employees were participating. Armstrong 0:14:35.920 --> 0:14:39.200 would later apologize for this breach in etiquette. A O 0:14:39.360 --> 0:14:41.800 L would spend off Patch and sell off its ownership. 0:14:41.880 --> 0:14:47.360 In two thousand fourteen, in A O L purchased tech Crunch, 0:14:47.600 --> 0:14:50.200 a tech news site that was founded back in two 0:14:50.200 --> 0:14:53.360 thousand five. Tech Crunch is still part of the overall 0:14:53.400 --> 0:14:56.960 company that we'll get into how that company has changed 0:14:57.000 --> 0:15:00.360 in just a little bit. Also in a o L 0:15:00.480 --> 0:15:03.960 bought a young web hosting service called about dot me, 0:15:04.520 --> 0:15:07.360 which had launched in October two thousand nine, so it 0:15:07.440 --> 0:15:09.400 wasn't even a full year old when a o L 0:15:09.480 --> 0:15:12.520 bought it. About dot Me is meant as a sort 0:15:12.560 --> 0:15:15.800 of centralized personal web page, and it's meant to coordinate 0:15:15.840 --> 0:15:18.600 all the various online points of contact a person might 0:15:18.680 --> 0:15:22.960 have in one place. So there are various social media accounts, 0:15:23.000 --> 0:15:26.680 email addresses, websites, all that kind of stuff. And that way, 0:15:26.760 --> 0:15:28.720 if you went to about dot me and you searched 0:15:28.800 --> 0:15:32.160 for me, presumably you would find links to all the 0:15:32.160 --> 0:15:34.640 different ways that I have an online presence, and I 0:15:34.680 --> 0:15:37.120 can cultivate that, I can decide which ones they share 0:15:37.120 --> 0:15:40.520 and which ones they don't, and like Bibo, this acquisition 0:15:40.960 --> 0:15:44.440 ended up not being a great fit. Tony Conrad, who 0:15:44.520 --> 0:15:47.280 was one of the co founders of about dot me, 0:15:48.040 --> 0:15:51.400 was able to buy back majority ownership of the site 0:15:51.520 --> 0:15:54.320 from A o L in two thousand thirteen, and it 0:15:54.320 --> 0:15:57.760 had been two years and a month since a o 0:15:57.920 --> 0:16:00.440 L had bought the company. The detail else of the 0:16:00.440 --> 0:16:03.240 two business transactions how much A o L paid for 0:16:03.280 --> 0:16:04.920 it and how much Conrad had to pay to get 0:16:04.960 --> 0:16:08.160 it back were never made public, but Conrad did tell 0:16:08.200 --> 0:16:10.760 The New York Times that he paid a fraction of 0:16:10.800 --> 0:16:13.680 what A O L had paid for the company back in. 0:16:15.520 --> 0:16:18.760 So once again, a O L buys a company and 0:16:18.800 --> 0:16:21.000 then sells it off at a fraction of what it 0:16:21.040 --> 0:16:23.720 paid for it once it realizes this wasn't a good 0:16:23.720 --> 0:16:26.560 fit after all. It seems to be a pretty common theme. 0:16:27.600 --> 0:16:30.960 In two thousand eleven, A O L made another big 0:16:31.080 --> 0:16:34.680 media acquisition when it bought The Huffington Post for about 0:16:34.720 --> 0:16:39.720 three hundred fifteen million dollars. Arianna Huffington's, the founder of 0:16:39.760 --> 0:16:43.120 the Huffington's Post, was named a O L Content Chief, 0:16:43.200 --> 0:16:46.280 and she held that position until two thousand sixteen, when 0:16:46.320 --> 0:16:48.800 she would step down from A O L to concentrate 0:16:48.880 --> 0:16:52.280 on a new startup called Thrive Global. The Huffington's Post 0:16:52.320 --> 0:16:56.320 acquisition was in February two thousand eleven. In April two 0:16:56.320 --> 0:16:59.680 thousand eleven, A O L would cut nine hundred staff 0:17:00.000 --> 0:17:03.000 from The Huffington's Post. Now that included two hundred jobs 0:17:03.040 --> 0:17:06.280 in the United States and seven hundred jobs in India. 0:17:06.440 --> 0:17:09.480 Tim Armstrong told reporters that the company's goal was to 0:17:09.520 --> 0:17:13.520 move toward having s of a o L staff working 0:17:13.560 --> 0:17:18.040 in editorial or other content divisions like tech Crunch. The 0:17:18.080 --> 0:17:22.080 Huffington Post is still part of the overall company. Armstrong 0:17:22.160 --> 0:17:24.920 was guiding a o L to focus more on creating 0:17:25.040 --> 0:17:29.000 content and then advertising against that content, and it was 0:17:29.040 --> 0:17:34.879 working as recently as Internet subscriptions made up of a 0:17:34.960 --> 0:17:38.800 o L's revenue, but with Armstrong's changes, that was shifting 0:17:38.880 --> 0:17:44.000 more toward revenue from advertising, which is good because again 0:17:44.200 --> 0:17:47.920 the dial up service was not going to increase year 0:17:47.960 --> 0:17:51.360 over year. In two thousand thirteen, the company posted its 0:17:51.440 --> 0:17:55.639 first revenue gains year over year since two thousand five, 0:17:56.480 --> 0:17:59.360 them in the company was finally growing again from revenue. 0:18:00.160 --> 0:18:03.399 The company continued its course by acquiring a video ad 0:18:03.440 --> 0:18:07.840 company called adapt dot tv for four hundred five million dollars. 0:18:07.880 --> 0:18:10.640 It actually was able to pull market share away from 0:18:10.680 --> 0:18:14.200 Google this way, and in a o L would post 0:18:14.280 --> 0:18:20.120 a one six million dollar profit. Also in al began 0:18:20.200 --> 0:18:23.560 to face pressure from investors to make another really big move. 0:18:24.000 --> 0:18:28.360 The pressure came from an American hedge fund called Starboard Value. 0:18:28.840 --> 0:18:32.440 The organization owns shares and numerous companies, including A two 0:18:32.480 --> 0:18:36.040 point four percent ownership of a O L. And it 0:18:36.080 --> 0:18:39.320 was using its stake to influence how those companies are run, 0:18:39.640 --> 0:18:42.280 which is something shareholders do all the time. You can 0:18:42.359 --> 0:18:46.159 vote because of your shares, although the amount of influence 0:18:46.280 --> 0:18:50.080 you can exert is based on how many shares you hold. 0:18:50.520 --> 0:18:53.240 If you hold one share and a company has millions 0:18:53.280 --> 0:18:56.480 of shares out in the market, your vote probably isn't 0:18:56.480 --> 0:18:59.320 going to make a whole lot of difference. Starboard is 0:18:59.359 --> 0:19:02.719 sometimes called an activist investor because it takes such an 0:19:02.760 --> 0:19:05.479 active role in steering the course of the companies that 0:19:05.600 --> 0:19:09.240 it invests. In The specific direction that the investors wanted 0:19:09.280 --> 0:19:12.280 to push A O L toward was in a merger 0:19:12.359 --> 0:19:17.119 with Yahoo. Starboard was similarly putting pressure on Yahoo because 0:19:17.200 --> 0:19:20.399 it had steak in Yahoo as well. Spoiler alert, by 0:19:20.440 --> 0:19:23.879 the way, those two companies AOL and Yahoo would eventually 0:19:23.960 --> 0:19:28.160 be brought together, but not through this method. At the time. 0:19:28.640 --> 0:19:32.080 Armstrong would refer to the proposed merger as quote a 0:19:32.240 --> 0:19:36.439 dead notion end quote. And then we get to and 0:19:36.520 --> 0:19:40.640 another really big change for A O L. Armstrong had 0:19:40.680 --> 0:19:44.400 been leading the company since two thousand nine. His leadership 0:19:44.440 --> 0:19:46.840 was marked by both success in the form of guiding 0:19:46.880 --> 0:19:50.000 a o L too year over year revenue gains and 0:19:50.200 --> 0:19:54.159 some failures like the mess with Patch, but overall a 0:19:54.320 --> 0:19:56.639 O L was in much better shape as a standalone 0:19:56.680 --> 0:20:00.480 company adapting to the realities of a broadband connected Internet 0:20:00.840 --> 0:20:03.200 than it had been when it was under the umbrella 0:20:03.280 --> 0:20:06.800 of Time Warner. In two thousand fifteen, another company would 0:20:06.800 --> 0:20:10.240 step up to change things, and that company was Verizon. 0:20:11.640 --> 0:20:16.200 Verizon is a telecommunications conglomerate that traces its history back 0:20:16.240 --> 0:20:19.359 to A T and T. In the eighties, the United 0:20:19.359 --> 0:20:22.080 States Justice Department ordered A T and T to break 0:20:22.160 --> 0:20:24.639 up the system of companies that had been under the 0:20:24.760 --> 0:20:28.359 Bell system. It's named after the Bell Telephone Company, and 0:20:28.440 --> 0:20:32.080 ultimately it's named after Alexander Graham Bell. A T and 0:20:32.119 --> 0:20:35.440 T was originally one of the companies under the American 0:20:35.480 --> 0:20:38.480 Bell Telephone Company, but then A T and T would 0:20:38.520 --> 0:20:41.680 go on to acquire the assets of its parent company 0:20:41.720 --> 0:20:45.880 and become the new parent company back in eight By 0:20:45.880 --> 0:20:48.960 the nineteen eighties, the U. S Government had determined that 0:20:48.960 --> 0:20:51.560 the Bell system was a monopoly and ordered A T 0:20:51.640 --> 0:20:54.040 and T to break up the system so that there 0:20:54.040 --> 0:20:58.240 would be multiple competing companies operating the telephone service Bell 0:20:58.320 --> 0:21:01.080 Atlantic was one of the is that was broken up 0:21:01.200 --> 0:21:05.520 in this process. Bell Atlantic itself consists of four smaller 0:21:05.560 --> 0:21:09.399 telephone companies, or it did at the time, and eventually 0:21:09.600 --> 0:21:13.080 Bell Atlantic would become Verizon in two thousand. That was 0:21:13.119 --> 0:21:17.840 when Bell Atlantic merged with another telecommunications company called GTE Corporation, 0:21:17.960 --> 0:21:21.879 and thus Verizon was born. Verizon acquired A o L 0:21:22.400 --> 0:21:26.720 for four point four billion dollars in cash, a huge 0:21:26.720 --> 0:21:30.040 amount of money, but a pittance compared to the hundred 0:21:30.080 --> 0:21:33.399 sixty billion dollar deal that had taken place between A 0:21:33.520 --> 0:21:37.320 O L and Time Warner. Analysts said that Verizon's motivation 0:21:37.400 --> 0:21:40.840 was likely fueled by a slowing mobile market. At the 0:21:40.840 --> 0:21:44.120 time of the acquisition, Verizon was sitting at number fifteen 0:21:44.240 --> 0:21:48.000 on the Fortune five D list. Today it's down to sixteen. 0:21:48.160 --> 0:21:52.600 Still still not bad, but success depended heavily on growing 0:21:52.640 --> 0:21:56.040 the mobile market, and as more people by mobile phones, 0:21:56.560 --> 0:22:00.520 the demand was was decreasing, right there fewer people who 0:22:00.600 --> 0:22:04.160 don't have a mobile phone. Grabbing a O L, which 0:22:04.240 --> 0:22:08.080 was making real progress in online advertising must have looked 0:22:08.080 --> 0:22:11.479 like a pretty sweet deal. But we've seen that before 0:22:11.680 --> 0:22:15.600 in this series, haven't we. Where companies have thought, oh, 0:22:16.000 --> 0:22:18.120 we'll just get this other company that's already got its 0:22:18.200 --> 0:22:21.920 hand in in this industry, and then we can just profit. 0:22:22.600 --> 0:22:25.240 So what actually happened, Well, I'll tell you, but first 0:22:25.320 --> 0:22:35.800 let's take another quick break to thank our sponsor. Tim 0:22:35.920 --> 0:22:38.639 Armstrong stayed in the driver's seat at A O L. 0:22:38.920 --> 0:22:42.359 Upon the Verizon acquisition. The company continued to focus on 0:22:42.400 --> 0:22:46.240 ad revenues, and it also launched a news service called One. 0:22:46.960 --> 0:22:50.600 One represented a unification of a O L's various ad products, 0:22:50.640 --> 0:22:53.879 including the ones the company had acquired by buying other companies, 0:22:54.480 --> 0:22:58.520 kind of making a central, one stop shop for advertisers. 0:22:58.560 --> 0:23:01.280 According to a tech Crunch p on the product, the 0:23:01.320 --> 0:23:04.119 idea was that advertisers could use that tool to optimize 0:23:04.160 --> 0:23:07.680 campaigns across all of a O L's capabilities, which would 0:23:07.680 --> 0:23:12.280 include television, video, web based ads. So you would come 0:23:12.359 --> 0:23:14.200 up to A O L and say, I want to 0:23:14.240 --> 0:23:18.040 run an advertising campaign about this product. Here's my budget. 0:23:18.480 --> 0:23:21.000 How can we make the best use of this so 0:23:21.040 --> 0:23:24.000 that we reached the most people. While searching for stories 0:23:24.040 --> 0:23:27.160 about A O l that were centered around this particular 0:23:27.200 --> 0:23:30.040 time of its history, one thing that jumped out at 0:23:30.040 --> 0:23:34.000 me was how many media outlets posted surprise takes on 0:23:34.000 --> 0:23:37.040 the fact that in two thousand fifteen, a o L 0:23:37.160 --> 0:23:42.040 still had two point one million customers using dial up service. 0:23:42.840 --> 0:23:45.000 You know, i'd said back in two thousand seven that 0:23:45.200 --> 0:23:49.200 was still having you know, millions of people. Two thousand fifteen, 0:23:50.560 --> 0:23:53.960 still two point one million people using dial up. Now, 0:23:54.680 --> 0:23:58.560 the surprise that the media reacted with strikes me as 0:23:58.560 --> 0:24:02.080 a little elitist. Actually, it strikes me as a lot elitist, 0:24:02.480 --> 0:24:04.640 because it can be very easy for people like me, 0:24:05.160 --> 0:24:07.120 someone who lives in a large city, or at least 0:24:07.280 --> 0:24:11.840 a decent sized city, to forget that broadband penetration isn't 0:24:11.960 --> 0:24:15.840